A wise auditor told me that we really only ask one question in our audits: “What did you do with the money?” For variety, we apply different inflections, mask the question’s nature with other words, and probe the who, what, why, where and how aspects of the question. But fundamentally we trace money from its sources through its transformations into personnel and equipment; study the decisions, activities, mission, and objectives sought with the money, and consider the results that are achieved.
So, if someone were to tell an auditor to follow the money, I would expect that auditor to ask the question about anything the agency might have done to see if the agency could have handled the money better. If limits are placed on an auditor, or if that question cannot be asked of certain people or activities, then the auditor’s integrity is seriously compromised. The city of San Antonio, Texas created an auditor’s office (without benefit of ALGA’s model legislation) but it really only wanted the appearance of an auditor, and the consequences are clear—as I write, the last two auditors each served for less than a year.
And why is that? The most recent—now former—San Antonio City Auditor, Pete M. Gonzales, Jr., was told not to ask certain questions. Two members of the Audit Committee told Pete he was not allowed to conduct performance audits, even though that office had conducted forty-six performance audits since 2001. Pete had been on the job less than a year and apparently two audit subcommittee members—both city council members— wanted things done differently now.
They didn’t want him to audit the playground safety inspection program in the city’s parks, even though he saw it as a great risk since it had never been audited. At a meeting to discuss this addition to his audit schedule, Pete was told that those kinds of audits were out of bounds for him. The audit subcommittee and the city manager made it very clear to him that his accounting background was appropriate for conducting “financial audits” and nothing more. When I spoke to Pete, he said that he resigned under pressure because he could not continue to perform as the city auditor under those restrictions.
Pete has some vindication because a San Antonio Express-News investigative report looked at the playgrounds and found serious safety problems. It reported the last inspection by parks occurred five years before, and many of the recommended repairs had never happened. The parks director had originally claimed they conducted annual inspections, but later admitted that was not true.
Now Pete can say, “I told you so,” which is the belated balm of ignored auditors. Needless to say, the equipment has since been repaired or removed. Pete told me that he couldn’t have lived with himself if a child had been hurt while he followed city council’s instructions and ignored risks like that.
Lest we local government types feel too inadequate, here is an example at the federal level that is even more breathtaking. You can read the whole GAO audit (GAO-08-857) on the website but here is an excerpt from the summary:
The Defense Contract Audit Agency (DCAA) under the Department of Defense (DOD) Comptroller plays a critical role in contractor oversight by providing auditing, accounting, and financial advisory services in connection with DOD and other federal agency contracts and subcontracts. DCAA has elected to follow generally accepted Government Auditing Standards. These Standards provide guidelines to help government auditors maintain competence, integrity, objectivity, and independence in their work.
What happened is that the GAO found that DCAA made an up-front agreement with the contractor to limit the scope of work and basis for the audit opinion. When the contractor was unable to develop compliant estimates, the DCAA wrote a draft opinion of “inadequate in part.” Subsequently, DCAA management threatened the senior auditor with personnel action if he did not delete findings from the report and change the draft audit opinion to “adequate.”
There are other similar findings but the most disturbing is the effort to subvert this audit, which reports “Moreover, during GAO’s investigation, DCAA managers took actions against staff at two locations, attempting to intimidate auditors, prevent them from speaking with investigators, and creating a generally abusive work environment.”
The DCAA and San Antonio officials created situations where an auditor’s integrity was challenged. The Standards are clear that auditors need to be free to conduct their work without interference. An auditor’s integrity is tested when independence is impaired. These stories illustrate how some auditors defend the Standards and their professionalism, while others “adapt.”
Integrity has other elements in these stories: an agency should not claim it has an independent auditor when the watchdog is chained up. Someone called an auditor creates the appearance of accountability, and both DCAA and San Antonio were revealed to have much less. The DCAA needs to follow its Standards and San Antonio needs to let its auditor be an independent professional. If it wishes to make a gesture of good faith to its citizens, the city council should also adopt the model legislation developed by ALGA.
One other integrity element needs to be addressed. The DCAA was created to hold contractors accountable, and the San Antonio City Council was elected to hold the city manager accountable. Somewhere these responsibilities got sidetracked. Leadership should want a clear and accurate view of their agency’s activities and recommendations for improvement. The actions of the leadership of both those agencies raise questions about their own integrity.
Here is a simple truth: an organization’s leadership cannot sustain an illusion of quality, competence, and success. You can’t fool all the people all the time. It’s always better to acknowledge the reality about problems and work to solve them. An independent, professional auditor builds integrity throughout government, and public confidence grows when it sees a government that values transparency, frank self-assessment, and improvement through audits.
